In Letter To Department Of Labor, Schneiderman Urges Full Implementation Of Fiduciary Rule Without Further Delay

DOL’s Existing Delay Could Cost Investors $890 Million Over The Next Ten Years; Killing the Rule Altogether Could Cost IRA Investors Alone $189 Billion Over The Next Ten Years

Schneiderman: This Commonsense Rule Would Ensure That Financial Advisors Act In The Best Interest Of Their Clients – Hardworking New Yorkers Saving For Their Retirement

Attorney General Eric T. Schneiderman today urged the Department of Labor to resist the Trump Administration’s efforts to kill the Fiduciary Rule, an investor protection that would require financial advisors to disclose conflicts of interests and to act in their clients’ best interest — rather than their own. Additionally, it seeks to protect consumers saving for retirement in New York and across the country from financial advisors who recommend investing in assets whose sale is financially beneficial for the advisor but harmful to the client who could end up paying higher fees. The rule, which was enacted under President Obama after more than six years of analysis and multiple opportunities for public comment, would have become enforceable earlier this month, but was delayed by 60 days following a directive by President Trump that the Department of Labor should reexamine and consider rescinding the rule.

“Financial advisors should act in their client’s best interest, not their own,” said Attorney General Schneiderman. “The Fiduciary Rule is critical to protecting New Yorkers – and Americans across the country – who are working to save for their retirement. Yet President Trump has delayed this commonsense rule – and his Labor Secretary nominee’s evasive answers during his confirmation hearing are cause for concern that the administration will kill it altogether. It’s high time for the Trump administration to put the interests of hard-working Americans first.”

More and more of today’s workers turn to investment accounts that would be covered by the Fiduciary Rule, in order to save for their retirement. If the Trump Administration continues to delay implementation of the rule or blocks the rule altogether, the impact on workers saving for retirement would be costly.

The Department of Labor itself has reported that investors could lose $147 million this year and $890 million over ten years because of President Trump’s 60-day delay in implementation. If the Trump Administration kills the rule, a worker whose retirement savings are held in a retirement plan governed by ERISA (such as a 401(k)), who then rolls his or her retirement savings into an IRA, could lose up to 23 percent of the value of those savings over 30 years of retirement due to conflicted advice. Furthermore, conflicted advice given for mutual fund investments alone could cost IRA investors between $95 billion and $189 billion over the next ten years.

The Fiduciary Rule was developed following broad academic and market research, economic analysis, and public comment. The final rule followed multiple proposals and consideration of the extensive public record and was carefully crafted to protect investors without placing undue burdens on the financial services industry.